A: On January 1^st 2015, XYZ Company borrowed $5,000 from a local bank ABC Bank by signing a promissory note. The terms were the following. There will be 12% interest per year and will be paid monthly. The full $5,000 to be paid at once on January 1^st 2016.

Assuming the facts from problem A, which of the following is journal entry for January 1st 2016?

a. Notes Receivable Cash 5000 5000 b. Interest Expense Nots Payable Cash 600 5000 5600 c. Notes Payable 5000 Cash 5000